"Those among the rich who are not, in the rigorous sense, damned, can understand poverty, because they are poor themselves, after a fashion— they cannot understand destitution. Capable of giving alms, perhaps, but incapable of stripping themselves bare, they will be moved, to the sound of beautiful music, at Jesus’s sufferings, but His Cross, the reality of His Cross, will horrify them." Léon Bloy

17 June 2015

The Fed and the equity markets are largely self-referential at this point.

That means that rather than effectively reflecting and addressing the broader reality of the economy, they are focused on themselves.

For the Fed, their strong desire is to raise rates two times fairly soon to get off the Zero bound before we draw closer to the Presidential elections. The Fed is very sensitive to this.

Only the terrible economic results in the first quarter held them off from raising 25 basis points at this meeting. They need to raise within the context of some semblance of economic stability to maintain the illusion of confidence.

As for the US equity market, it is running on hot money, stock buybacks, and 'the Game.' The Game is the Ponzi-like self-referential speculation, with a charade of economic numbers coming out of a spin machine that keeps pushing prices higher into asset bubble territory.

The Fed would like to cover their ass before the market crashes, and before moneyed interests trot out their latest assortment of political candidates.

Like the IMF, their policies have been serial failures, going back to the 1990's at least. They do not wish to be held accountable for this, as noted in the intraday commentary from the other day.

When privileged people repeatedly fail at a task, they quite often turn to harshness and even cruelty towards those whom they were purported to be helping, in a revulsion against their failed obligations.

Since they are incapable of faults, while maintaining their credibility which is founded upon their reputations and personal prestige, the people enduring their many plans themselves must have failed. And so the people, not the planners, must be made to change, to improve, and often to be chastised for their shortcomings.

And the financial masters will do this, almost piously, in the name of saving a system which in fact has become an extension of themselves, and which finally serves no one well but them.

So no real reform can come, and little progress can be made, because the 'managers' are incapable of even admitting to their repeated failures out of self-preservation. And they will excuse this in the name of preserving 'confidence.'

Le Propriétaire

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Need Little - Want Less - Love More

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

"In the Incarnation the whole human race recovers the dignity of the image of God. Thereafter, any attack even on the least of men is an attack on Christ, who took on the form of man, and in his own Person restored the image of God in all. Through our relationship with the Incarnation, we recover our true humanity, and at the same time are delivered from that perverse individualism which is the consequence of sin, and recover our solidarity with all mankind." Dietrich Bonhoeffer

"A credibility trap is when the managerial functions of a society have been sufficiently compromised by corruption so that the leadership cannot reform, or even honestly address, the problems of that system without implicating a broad swath of the powerful, including themselves.

The moneyed interests and their aspirants tolerate the corruption because they have profited from it, and would like to continue to do so. Discipline is maintained by various forms of soft financial rewards and career and social coercion."

These are personal observations about the economy and the markets. In providing information, I hope this allows you to make your own decisions in an informed manner, even if it is from learning by my mistakes, which are many. As a standing policy I never provide individual investment advice to anyone. I will only occasionally disclose my personal positions for purposes of illustration. Understand that my own circumstances could differ greatly from your own, and therefore what is suitable for me may not be suitable for you. My comments are intended to be reflection on general macro financial and economic events and trends.